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Prime Minister John Key says it is still 50-50 whether or not
The Hobbit movies will be made in New Zealand and he's not overly
confident they will.

He was speaking after a meeting at Premier House in Wellington
involving representatives from the United States-based production
companies Warner Bros and New Line Cinema, and government
ministers.

Key said industrial laws and other economic issues will be
considered over the next day or two.

Warner Brothers started looking for alternative locations after
the Australian-based union Media, Entertainment and Arts Alliance
issued an international actors' work ban on the films in an attempt
to negotiate a collective contract for the performers involved.

New Zealand Actors Equity, part of the MEAA, withdrew the
recommendation last week, but the studio had already started to
consider shifting production elsewhere.

"The reality is that if it wasn't for the industrial action then
they would have pulled the trigger on these movies some months ago
and unfortunately that's the position we now find ourselves in,"
Key told reporters at parliament after the meeting.

He said industrial relations were the primary concern, but there
were also economic issues to consider.

Key said changes to industrial laws would be looked at.

"The lawyers will sit down and think about industrial policy, we
will go away and think about the proposition economically, and we
will re-group and over the 24 to 36 hours see whether a deal is
possible."

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Key said there was a "very large" shortfall between what New
Zealand was prepared to offer in terms of tax sweeteners, and what
other countries were prepared to offer and there will not be a
bidding war.

He said it's still very 50-50 whether or not the movies will be
shot in New Zealand and "I'm not overly confident, I have to
say."

Key said: "There's a big gap economically between what's on the
table and unfortunately we can't put back together those pieces
that have been broken but we'll do our best.

"I think they have burnt a lot of money in the last six weeks or
so trying to make a decision about whether they are going to go
ahead in New Zealand or go ahead in another location and they've
been looking aggressively overseas in quite a few locations. They
eventually want to get on with it."

Key said Warner Bros like the creative work done in New Zealand
and want to do business here, but the studio needs certainty.

"These are some of the biggest movies Warner Brothers will have
ever made so they are trying to take risks away. And...the actions
of the unions in the last few months spells out large risk to them
and they have a fiduciary responsibility to their shareholders to
do the best they can to make sure that they can make their
movies."

The Prime Minister said he thinks there will be a decision from
the studios by the end of the week at the latest on whether the
movies are going to be made in New Zealand.